China's top two IT giants last week announced a business reshuffling and development strategy to cater to the growth of Internet.
Legend Holding and Founder Holding, the two top computer hardware and software producers in the country, both set up their Internet subsidiaries named Legend Digital China Limited and EC-Founder Co Ltd respectively.
Legend Holding, the top PC vendor in China and the Asia-Pacific region except for Japan, split its business into two parts earlier this year: access equipment providing, ICP (Internet content provider) and ISP (Internet service provider); e-commerce driven on-line distribution, system integration and network products.
The newly launched Legend Digital China Limited headed by Guo Wei will carry on the e-commerce distribution, system integration and network products business.
"Legend finished its transformation from a traditional IT company to e-commerce via launching of the new firm,'' said Liu Chuanzhi, chairman of Legend Holding.
"The new firm will enable Legend to achieve its US$3 billion sales revenue in the 2000 financial year, which ends on March 31, 2001,'' he said.
As a company with a market value of HK$60 billion (US$7.7 billion), the move is a life or death change for Legend, he said.
To support the establishment of the new firm, Legend's change touched everybody in the group.
Legend earlier became the first domestic IT company to successfully adopted the Enterprise Resources Planning (ERP) system, with investment of more than 30 million yuan (US$3.6 million).
Operation efficiency will be greatly upgraded via ERP, Liu said.
Legend Digital China Limited launched its e-commerce platform, www.e-bridge.com.cn, which will link Legend with its over 3,000 agents nationwide.
"Legend and its agents are united on-line,'' said Guo Wei.
While Founder Holding, also a Hong Kong-listed company, said its new branch EC-Founder Co Ltd will become an Internet software company.
"EC-Founder will not be ISP or ICP, we aim to be an e-commerce enabler and help China's government bureaux and commercial companies adopt e-commerce,'' said Ricky Lee, president of the firm.
Compared with Legend, which was also born in Zhongguancun, "China's Silicon Valley,'' in the 1980s, Founder has been overshadowed by Legend in recent years.
Unlike Legend, which has maintained a 20 percent annual growth, Founder has suffered profits decline during the previous two years.
"But Founder finally finished its 10-year internal battle,'' said Wang Xuan, chairman of Founder Group and a professor at Beijing University.
"We are going back to a healthy growth track again,'' he said.
Founder Holding will next week announce its "satisfied'' half year result in Hong Kong, Wang said.
Founder, gaining fortune from its predominant publishing system since the late 1980s, used to be a shining star in domestic IT industry.
The "Huaguang'' and "Founder'' printing systems invented by Wang and his team stirred up a pagemaking and printing revolution in the Chinese market in the early 1990s.
At present, Founder's printing system still occupies over 99 percent of the newspapers and 90 percent of the publication market.
Both Legend and Founder said they will become members of the Global Top 500 by 2010.
Whether it is a coincidence or purposeful arrangement that the two launched Internet subsidiaries almost at the same time, the move is a clear signal that China's traditional IT companies are losing no time in jumping on the Internet and e-commerce boat to keep their competitive edge and try to survive in the new economy.
(China Daily)
